Ok, got a call. 2 unrelated people formed a 2 member LLC and already accepted some donations and spent most of it on media ads, legal fees and filing fees but no salary pd and members recieved $0 compensation of any type and by doing so was under the impression they were a 501(c)4 all along. I guess previous attorney dropped the ball. New attorney says they need to merge into an C-Corp or liquidiate LLC based on the laws of the AZ Dept of Corps. Then they want to apply for the 501(c) 4 status. Their main concern is will there be any taxable event to the members upon the merger?
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Are there any assets being transferred in the merger?
This brings to mind a curious question: Can an LLC elect to be taxed as a corporation and then file for tax exempt status under 501(c)__ ? Or is it necessary to be an actual corporation to file for exemption? I don't have much experience with 501s, but am curious if anyone knows if that can be done?"A man that holds a cat by the tail learns something he can learn no other way." - Mark Twain -
It's not necessary to be a corporation to file for 501(c) status, though I believe that in the case of 501(c)4 status, corporations are common.Originally posted by taxmandan View Post
I'm guessing that LLC's are limited to business purposes and thus ineligible to be non-profits, at least for the state in question. If that guess is correct, then then the purpose of incorporation as a non-profit would be for liability protection.Comment
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